European stocks decline as investors flee risky assets

European stocks declined for the third time this week, as investors fled assets deemed to be risky. Financial stocks fell as markets adopted a more pessimistic mood to the sector, while comments by US president Donald Trump that the dollar was getting too strong posed a drag on Wall Street banks.

Trading volumes were lower than average across most markets ahead of a four-day Easter break.

DUBLIN

The Iseq weakened towards the end of the session and closed down 0.8 per cent as most of its bigger stocks lost ground. Building materials group CRH was down 1.7 per cent at €31.78, while Ryanair compounded the previous day’s slippage, finishing down 0.8 per cent to €15.13.

Paper and packaging group Smurfit Kappa couldn’t repeat its positive Wednesday, closing at €24.28, down 0.4 per cent. Drinks group C&C fell 2.1 per cent to €3.69, and Bank of Ireland dropped 1.7 per cent to just below 24 cent.

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However, food group Kerry had a good day, gaining 1.3 per cent to €78.10. Hibernia Real Estate Investment Trust added 0.4 per cent to €1.29. Following the letting of the top two floors at Dublin office building 1 Windmill Lane, Davy Research has upgraded its forecasts on the stock.

LONDON

The FTSE 100 declined 0.3 per cent, in line with the broader decline on European markets, although volumes were light ahead of a market holiday.

Financials were the biggest drag on the blue-chip index, taking off nearly 10 points. HSBC, Standard Chartered and Royal Bank of Scotland all fell by 1.3 per cent to 1.7 per cent, with generally well-received earnings releases from their US peers failing to boost sentiment.

Stocks trading ex-dividend (without rights to their latest dividend payout) dragged, including Standard Life, which dropped 2.4 per cent and was the biggest individual faller.

Energy stocks also dragged, taking off around 9.7 points. Royal Dutch Shell fell 1.2 per cent, and BP was down 0.3 per cent as the price of oil edged lower.

Associated British Foods, the owner of the Primark/Penneys clothing chain, jumped 3.6 per cent to its highest level since the beginning of January after Jefferies raised its rating on the stock to a “buy”, citing continued strength in sugar and a positive turn in Primark margins .

EUROPE

The Stoxx Europe 600 Index retreated 0.4 per cent at the close, after advancing to a 16-month high in the previous session. In France, the Cac 40 fell almost 0.6 per cent, while the German Dax dropped 0.4 per cent.

All but four industry groups declined, with banks extending losses into a fifth day. Spain’s Banco Popular and Austria’s Raiffeisen Bank led the sector’s losses, down 3.6 per cent and 5.5 per cent respectively. French banks Societe Generale, Credit Agricole and BNP Paribas were also among the top fallers, down by between 1.4 and 2.6 per cent.

German airline Lufthansa fell 3.1 per cent after investor Infinite Miles placed a 2.5 per cent stake at €15.25 per share.

NEW YORK

Wall Street edged lower in early trading on Thursday as lingering concerns about geopolitical instability and growth overshadowed stronger-than-forecast banking profits.

The market was on track for its third straight day as investors also weighed Trump’s comments in the Wall Street Journal that the dollar “was getting too strong”.

Wells Fargo’s shares fell 2 per cent, pulling down the S&P 500 and the financial sector, after the bank reported a big drop in mortgage banking revenue. JPMorgan and Citigroup slipped, despite reporting better-than-expected quarterly profits.

Eight of the 11 major S&P 500 sectors were lower, led by a near 1 per cent decline in the energy sector as oil prices fell. However, the technology sector’s 0.3 per cent rise put it on track to break its nine day losing streak.

(Additional reporting: Bloomberg/Reuters)